1992-2008 SUBIC BAY METROPOLITAN AUTHORITY QO OFFICE OF THE CORPORATE SECRETARY sumtfeay | 29.229, orton 2a Sule toy Heanor Zane, ritppine 222 Racy Tol 047.262.4172 4173/4174. Fee 047 282-2170 Certification No. 08-636 Series of 2008 MEMORANDUM ‘Subject - POLICY GUIDELINES ON THE ADMISSION OF DUTY FREE AND TAX EXEMPT MOTOR VEHICLES This certifies that: The records of the Office of the Corporate Secretary show that during the One Hundred Thirteenth (113") Meeting of the Board of Directors of the Subic Bay Metropolitan Authority held last 18 September 2008 wherein. there was a quorum to validly transact business, the following resolution was approved: “Resolve, as it is hereby resolved, that upon recommendation of Management and without prejudice to COA Regulations and pertinent laws on the matter, the Board hereby approves the Policy Guidelines on the Admission of Duty Free and Tax Exempt Motor Vehicles, subject to the following modifications: © On the list of luxury motor vehicles units ~ Exclusion of VAXHAUL from the list of luxury motor vehicles - To specify and enumerate the variances of the motor vehicles that will be deemed as luxury motor vehicles considering that not all BMWs, Mercedes Benz, etc. are luxury motor vehicles. Any vehicle not qualified among the list of variances shall be subject to the Board's approval * On the Criteria to Avail of the Duty Free and Tax-Exempt Admission Privilege - To modify the required amount of investment from “THIRTY MILLION PESOS (Php30,000,000.00)" to “US$250,000.00 or its equivalent in peso” for every vehicle to be admitted at the time of the application. - To modify the required number of employees from “at least 40 regular employees” to “at least 50 employees”, = To delete the provisions on “c. Annual Rental Payments" and “d. Expatriates” + On the Limitations on the Tax Exempt and Duty Free Admission Privilege + To modify item (I) to state that no duty free and tax- exempt vehicles shall be sold to any SBBF enterprise within a period of five years, instead of two years g= Item (J.1) was modified to specify “For TEVs admitted as BRAND NEW vehicles and those USED Trucks, Buses and Heavy and/or Agricultural Equipment, referred to in Sections 3.1.1 to 3.1.5 of Executive Order No. 156. A copy of the Policy Guidelines on the Admission of Duty Free and Tax Exempt Motor Vehicles is Incorporated herein by way of reference.” Issued this 7" day of October 2008. Corporate Secretary Cettification No. 08-636 Re: Policy Guidelines on the Admission of Duty Free and Tax Exempt Motor Vehicles Page 2 of 2POLICY GUIDELINES ON THE ADMISSION OF DUTY-FREE AND TAX-EXEMPT MOTOR V1 WHEREAS, uader Section 12 (b) of Republic Act No. 7227, as amended by Republic ‘Act No. 9400, the Subie Special Economic Zone siuall be operated and managed as a separate Customs teritory ensuring fiee low or movement of goods and capital within, into and exported ‘oul ofthe Subic Special Economic Zou, a wel as, provide incentives such as tax and duly-fiee importations of raw matecials, capital and equipment, WHEREAS, under Section 13 of Republic Act 7227, as amended by Reputfic Act No. 9400, Subie Bay Mettopolitan Authority (SBMA, for brevity) is the zone management authority of Subic Special Econornic and Freeport Zone; WHEREAS, there is a need to formulate rules and regulations pertaining to the duty free and tax exempt admission privilege of motor vehicles by Subic Bay Freeport (SBF, for brevity) registered business enterprise to prevent abuse; WHEREAS, there is a nced to support the domestic car industry by encouraging locators to patronize local car dealers and for them to avail of their zero rated value added tax incentive ‘on any local purchase of motor vehicles; NOW THEREFORE, for and in consideration of the foregoing premises, and pursuant to ~ the Memorandum of Agreement between the SBMA and the Bureau of Customs (BOC, for brevity) adopting and implementing Administrative Order No. 4-93 and in coordination and cooperation with the Land Transportation Office (LTO), the following guidelines are hereby promulgated oa the admission, registration and monitoring of duty-fiee and tax-exempt motor vehicles (LEV, for brevity), as follows: Loobrrace ‘These guidelines shall cover the admission into the SBFZ of any vehicle propelled by any poneg other than muscular power using the public highways, except road rollers, colley eas, et. ‘lassiied as follows: L. UTILITY-SERVICE VEHICLES — vehicles which are Indispeusable in the ' ‘conduct and operations of the SBF -registered authorized business activities, such as delivery trucks, cargo vans, and buses designed and for use exclusively for the ‘uansport of cargoes and passengess. 2, TOURIST-SERVICE VEHICLES ~ vehicles which are indispensable in the ordinary coutse of business of (outistoriented industries, such as hotels, resort and Jeisure estates, theme paiks and casinos to be utilized actually, directly and _ exclusively forthe puspose of transporting tourists in tourism related activities. In no case shall the value of each vehicle exceed US$50,000.00. —— 3S 3. COMPANY-SERVICE VEHICLES — vehicles that are to be used as service 2 \ ‘ehicles of SBE repsteredealerpise ils expalnits or enceutives. os. ‘No luxury motor vehicles intended fo be utilized as a company-service vehicle shall be ‘1 o ‘admitted tax-ftee and daty-iee info the SBF, unless itis a “gréen vehicle”, or if the offical eet stature of the end-user, Such as President, Chairman and Members of the Board of Directors of a wn ‘SBF registered enterprise, requires the same. In the said event, admission of these tax-exempt 3 ce vehicles shall be subject fo the criteria set herein and should be with the approval oft Board of Decors. 4 3 ‘ A QD ‘The following are considered luxury motor vehicles: Lay BOARD \* oa a Perrne tans? a. Rolls Royse ®. Porsche - b. Jaguar £ Maserati ©. Lotus g. Femati @. Bentley hy Buggati Policy Guidelines out Admission of Duty. Fre and Tax-Exempt Motor Vehiclesi, Vauxhall 2. GMC Yukon i ‘aa, GMC Yukon Kk. Dusenberg ‘bb, Maybach yh Cond ccc. Other motor vebicles with a m, Packard blue book value of, 1. Aubun 'USS50,000.00 or above, or its 0. BMW Gayerswichen Moteren equivalent, based oi the brand Works) ‘new value of the vebicle taken p. Lamborghini from U.S. Blue Book, Japan Red @. Land Rover Bool, of the World Car Year f. Range Rover Book, depending upon the 8. Alpha Romeo country of origin of the vehicle Lexus and its model. 1, Mercedes-Benz v. Acura Yow, Audi x. Land Cruiser ye Infiniti a |A green vehicle is defined as a vehicle that is considered to be more “environmentally ‘hiendly than traditional all-petvoleum intemal combustion engine vehicles (APICEVs), which includes, among others, hybrid gas, sola: vehicles, hydrogen vehicles and electsie vehicles. ON iD TAX-EXEMPT ADMISSIOI 1. THE FOLLOWING ARE QUALIFIED TO APPLY FOR ADMISSION OF DUTY FREE AND TAX-EXEMPT MOTOR VEHICLES (TEY) SBF registered enterprises with valid Certificate of Registration aud Tax Exemp (CRTE, for brevity) way apply for admission into the SBEZ tax-exempt vehicles necessaty for the conduct and operations of thee registered business activity, subject to the crteria/limilations set forth herein, provided, however, that SBMA reserves the right to disepprove or limit tie adssssion of TEVs when, in its judgment, it becomes nevessery to avert a violation of any law or any of its rules and regulations, oF to enforce a regulatory or administrative measur. 2. CRITERIA TO AVAIL OF THE DUTY FREE AND TAX-EXEMPT ADMISSION PRIVILEGE 2. | - For Tourist-Related And Service Vehicles Only: A Amount of Investmen ‘An applicantSBF enterprise must have an investment of THIRTY MILLION PESOS (Pinp30,000,000.00) far every vehicle to be admitted at the time of the ion. Additional TEVs can be availed of with every Php30,000,000.00 ‘The tenm “investment” cefers and is limited to investment made on nent and development of land and structure only. oR ee ; eel leg eat ee OR punctuate rouimtoyrearacenpunavinn — Jf mer a¢. Aumual Rental Payments An application-SBF enterprise must have at least Php30,000,000.00 annual reutal payment on a loVfaclity within the SBFZ as evidenced by an official receipt issued by SBMA. Additional TEVs can be availed of with every additional annual paymeat rentals of Php30,000,000.00, oR 6) Expauiates - ‘An SBF registered enterprise with a valid CRTE, shall be entitled to the edmission of SERVICE VEHICLES ONLY for every expatriate under its regular employment ‘and holding executive positions in the said SBF registered enterprise and who are residing inside the Freepot, provided tha! they have valid employment and Special Subic Investors Visa (SSIV) or Special Subie Working Visa (SSWV). ' 2.2 For Utility Vehicles Considered As Capital Equipment Notwithstanding the ctiteria mentioned ia itein no, 2, SBF registered enterprises, involved in transportation, travel and tours, andthe like, are entitled to the admission of utility vehicles as capital equipment vis-i-vis its SBF registered business activity and operations, but subject to the endorsement of the SDA for Business and Investment and approved by SBMA Board of Directors. 3. NUMBER OF ALLOWABLE MOTOR VEHICLES TO BE ADMITTED: Unility vehicles — maximum of 10 Tourist vehicles ~ maximum of 6 Company vehicles ~ maximum of 6 s In no case shall an SBF enterprise be allowed to edmit more than a combined number of ‘ttecK (15) velicles within the erm of its Lease Agreement, except if required by its operations and approved by the SBMA Board of Directors, 4. PERIOD TO EXERCISE THE PRIVILEGE. ‘The applicant-SBF enterprise niust have been operating for at lenst owe (1) year at the time of the application for Admission Authority, unless by dhe very nature of their business and the classification ofthe vehicles to be admitted, itis necessary to admit te same upon actual commencement of operations, in which case, adwission may be allowed subject to the approval of the SBMA Board of Director. 5. LIMITATIONS ON THE TAX-EXEMPT AND DUTY-FREE ADMISSION PRIVILEGE A, The privilege is personal and non-transferable, ‘The applicant - SBF enterprise must have uo outstanding finaneial obligations with ¥ SBMA unless he can show an SBMA Boatd of Directors approved paymeut scheme ‘covering the obligation and the fact that it has not defaulted on the said payment scheme agreement. C. Applicant-SBF enterprise must show proof or justification of the necessity of the vehicle(s) to be admitted in its business operations. Me Otinmntettnninsioeteendtatansiinviian TACTD. Issuance of Admission Authority shall be prior to the admission of the wx-exempt and duty-free motor vehicle into the Subic Bay Freeport Zone. E, No issuance of Admission Authority until and untess the previously admitted tax- ‘exempt and duty-free motor vehicles has been presented for inspection. F. Registration of he duty {ve2 aud tax-exempt motor vehicle with SBMA’s ‘Transportation and Communication Departinent (TCD, for brevity) and Registration of Tax-Exemption with LTO upon anival. G. Special SBMA blue plates sual be issued by the LTO to the TEV. ide the HH, Subject to the exceptions herein provided, all TEVs shall be for use Freeport only. L. Within ewe years from registration with the TCD, no duty-fiee and tax-exempt vehicles shali be sold to any SBF enterprise. t 4. Once the registered owner ceases to bea bonafde SBF enterprise he must 1. FOR-TEVs aduiled as BRAND NEW vehicles and those USED VEIMICLES, {ferred ion Sections 3.1 to 3.5 of Execulive Outer No, 156, 4 The owner should pay te coresponding taxes and daties; oR bs, Sel, assign or couvey the sane to a qualified SBF-registered enterprise t ‘To be considered BRAND NEW, the motor vehicle shall be: 4) of cuneat advance year model in the country of origin and/or manufacture, OR +) of year model immediately preceding year in te country oferigin ‘endor manufacture provide that: @ the motor vehicle has a mileage of not more than 200 kioreters, AND Gi) the motor vebiele has been acquired by the importer from the dealer a fist over. a 2. For TEVs admiled a5 USED VEHICLES, the onnct shouldbe a Sold to a qualified SBF registered entity and for use only within the Freepott zone; oR b, Reexported to other countries! “USED VEHICLE" shall refer only 10 those used vehicles coming fiom the county of origin ofthe equesting SBF-repsteed enterprise or was owed by the Daren compa or affiliate ofthe requesting SBF-repistered enterprise, t K, Request for extension or amendment of Admission Authority shall be granted tie request is made within its validity period, gas arena ete ose calc ly if6 REQUIREMENTS FOR THE ADMISSION OF DUTY FREEAAND ‘TAX- EXEMPT MOTOR VEHICLES Fa) Leter of tntent justifying the eques or the admission of the motor vehicle adessed tothe Heal of the Regulatory Group, ) Accomplished application form, ©) Original Copy of the Secretary's Certfieste of the SBF registered enterprise's representative, 4) SBMA Identification Card, Philippine Driver’s License and certified tue copy of valid SSIV or SSWY (for Expat exmployecs), ©) Valid CRTE, f) Certified True Copy ofthe Commercial sales invoice (brand new motor veiicles) £8) Certified True Copy ofthe Certificate of Ownership (used motor vehicles), 1h) Agreement ou conditions for admission of motor vehicle, attached to its application, aly agreed to and signed by the applicant, i) Cettfication from the Business and Investuient Group on the amount of iavestinent or Certification fom the Labor Center on the number of regular employees untit a centralized database has been created, 3) Cesificate of “No Outstanding Financial Obligations from the Accounting Office” and/or SBMA Board approved payment scheme (for admission of duty free and tax- ‘exempt brand new motor vehicles) unil a centralized database has becn created ky Notarized certification from the applicant, submitted before the issuance of an Adinission Authority, that the loading of the subject motor vehicle at the port of ‘origin has not yet been effected. 1) Cettfcation of Inspection ffom the TCD of previously admitted duty-free aud tax exempt motor vehicles. ¥ II}. SUBSEQUENT SALE, TRANSFER OR ASSIGNMENT OF DUTY FREE AND TAX- EXEMPT MOTOR VEHICLES Hor Vehicles within the two TL) Sale transfer or assignment of duty-free and tax-exempt (@) year petiod is protbited, 2) After te two (2) year prohibitory period: ‘or TEVS brand new vehicles and those used vehicles referred A {to in Sections 3.1,] 193.15 of Exceulive Order No, 156 8) The TEV can be sold, assigned or transferred without payment of the required tax and duties on the motor vehicle provided, i) Vendee, assignee or transferee is also a qualified SBF- registered; fi) Vendee, assignee or trassferee has not used up or availed of its admission privilege, iil) The type of vehicle and activity ofthe verulee, assignee, or transferee allows the sale, assignment or tansfer thereof; andiv) The TEV can be used oulside of the Freeport Zone upon issuance of the conduction pass. oR by The TEV can be sold, assigued or transferred upon payment of the ‘corresponding taxes and duties to: i i) Any eatity upon payment of the corresponding taxes and Altes; and ii) The TEV can be used outside of the Freeport Zone. ' 2) it ean be sold, ransferred, assigned, in accordance with Aa (i) 0 (Gi). However, it cannot be used outside the Freeport zone. It eannot 1’ bbe algo gold, agsigued or transferred as in Ab (i) 10 (ii)? 3) There can be no sale, wansfer or assignment of duty free and tax-exempt motor vehicles without prior writen clearance from TCD. 4) A payment of 1% transfer fee to SBMA based on the gross sale and/or compensation received in consideration of the sale, assignment or transfer of any TEV or 11S$200,00, whichever is higher. IV. CONDITIONS FOR THE USE OF DUTY FREE AND TAX EXEMPT MOTOR VEHICLES ‘A, Within the Fresport Zone All motor vehicles admitted tax and duty free by @ SBF registered enterprise shall be used oly within the Freeport Zone. ‘B. Outside the Freeport Zone Only those TEVs admitted as brand new vehicles and those used vehicles referred to in ‘Sectious 3.1.1 to 3.1.5 of Executive Order No. 156 can be used outside the Freepott Zoue subject to the following conditions: 4) Issuance of conduction pass upon physical presentation of the subject motor vehicle, which is @ prerequisite for the use of tax-exempt and duly-free motor vehicles outside the Freeport Zone. ) Bach TEV must be covered with a bond acceptable to SBMA which may be in cash, imevocable stand-by letter of credivbank guarantee or surety bond, equivalent to 100% of the amount of duties, axes, and other charges due on the subject vehicle and conditioned to the use of the subject vehicle in accordance with these Policy Guidelines. ©) All TEVs canuot be used outside of the Freeport zone for more than three landred thiny gx (336) hours or fourteen (Id) days in a month, One day shall mean twenty-four (24) hours." No succeeding conduction passes shell be issued unless the TEV is presented for inspection before the TCD. t ©, The Conduction Pass shall be presented atthe gate every time the motor vehicle is used Butside of the Freeport Zone with the following information: 5 otic ofthe Goverment Corporate Counel Opinio No, 108 Series of 2008,{) namels ofthe registered owner and deiver/s; ' ii) plate nuunber of the duty free and tax-exempt motor vehicles ii) date and time of departures; ad iv) date and time of return, ) No new conduction pass shall be issued unless the previously issued conduction pass ‘as been surrendered tothe TCD. V. PROCESSING FRE ~ All TEVe to be admitted {o SBFZ shall be assessed « processing fee of 1US$100.00 per vehicle. However, applications for admission of “green vehicles” shall be imposed processing fee of US$20.00 only. 1, Taxexempt and duty-free motor vehicles shall be subjest to petiodic and on-the-spot inspection or inventory 2. Duty free and tax exempt vehicles must be presente atleast once a noah at TCD or in the ‘munner ora such tines as may be set by the TCD. 3. Registered owners should repct to or notify the TCD on the whereabouts of dy free and xX exempt vehicles that fal to cet afer the validity of the pertinent trip ticket and ust present sufficient proof of justification for sid failure, ‘VIL. FINES and PENALTIES. ' ‘Hines Penalies 1. Admission of wx-exempt and duty free motor Usss,000.00 Yehicles by a non-qualified entity snd forfeiture of TTEY plus suspension ‘of CRTE for three (3) onthe 2. Admission of tacexempt motor vehicle prior {o application of Admiasion Authority. a. First Offense Uss 3,000.00 t bi. Second Offense USE 5,000.00 and forfeiture of Tv 3. Sale,ansfer or assignment of TEV the Two (2) year prohibitive period First offense |US$2,000,00 for both entities Second offense ‘Suspension of admission privilege of both entities for 2 years 4. Allowing the use of one's privilege or one's 'US85,000.00 for both entities ‘Adiission Autloity and suspension of admission privilege of otk: entities {or 2 years and forfeiture of wy, 5. Sale, Transfer, Assigament of TEV witout prioe clara, eodimatesetnnartanstacmnevain — EKce Fist offense - Second offense 6, Fatsfcation of Tip TickevConduction Pass ies offense 7. Pailuce to present TEV for inspectioninventory First Offense b. Second Otfense . Third Offense 8, Use ofdaty free and txcenempl vehicle outside Freeport zone longer tna the approved limit of days 10. Any otber act or omission tending to circumvent these Policy Guidelines VIIL TRANSITORY PROVISIONS USS1,000-00 for both entities two —yearsuspeasion of admission privilege ofboth entities USS3,00000and two year suspension of, brivilege without prejudice to the filing ofthe corresponding erirninal ct far falsification of documents uss 1,000.00 2-year suspension of ‘admission privilege Fling of appropriate case and recommendation for cancellation or revocation of GUE [USS100.00/excess day and locator shall be given 48 ‘ours fom the expiry date indiested on the conduction ‘pas to explain the noa- return of the TEV, otherwise, the presumption ‘of simugging rises. “After the epee of the prescribed 48 houg. a recommendation for Suspension of opections of business of the locator shall bbe submitted to the SBMA, osrd of Director, Depending on eurrounding circumstances, penalties may range fom 3 ine of 'USS100.00 to the forfeiture ‘of tie TEVe and suspension ‘or cancellation of fulwe applications for admission of TEVs and ofthe CRTE. 1. All existing TEVs admitied before the ellectvity of these Policy Guidelines may continuously avail of the issuance of Conduction Passes and all other privileges pertaining Uhereto, only if said used vehicles ate presented to Ue TCD for inspection within three 3) ‘mont ftom the approval of herein Policy Guidelines. Otherwise, said TEVs lose availment of conduction pass and all other pr new Policy Guidelines. es pertaining thereto and are automatically covered by this ode Cub ot Adan of yen Te ag Mowe Veli meL 2, All issuances inconsistent with herein Policy Guidelines are hereby repealed. 1x. ERPECTIVITY Herein Policy Guidelines shall take effet ypon approval of tbe Board and shall be applied in prospective. LF